IT LOOKS LIKE THE FIGURES PROVIDED BY THE STATE STATISTICS COMMITTEE CAN NO
LONGER BE A RELIABLE SOURCE OF INFORMATION. THE DATA ON LAST YEAR'S INVESTMENTS
SHOW A REMARKABLE DISCREPANCY, LEADING ECONOMISTS TO BELIEVE THOSE FIGURES HAVE
BEEN TAILORED. RUSSIA NEEDS AN INDEPENDENT STATISTICAL BODY.

According to the State Statistics Committee, investment by Russian companies
rose 2.5% during the first three quarters of 2002. However, according to the
same institution's figures on large and medium-sized enterprises, investments in
fixed capital fell. The estimates differ by an order of magnitude.

Investment by large and medium-sized enterprises in fixed capital amounted to
882.6 billion rubles in the first three quarters of 2002. During the same period
of 2001, the figure was 892.9 billion rubles in current prices. Taking inflation
into account, the investment drop among large and medium-sized enterprises was
at least 16% - according to the FBK auditing company. About 86% of investment
comes from large and medium-sized business, according to the State Statistics
Committee. But FBK analysts say: "If both figures are considered to be
correct, then investment by small enterprises ought to have at least
doubled." Yet there is no reason to believe that this has happened, while
there is every reason to believe that investment has actually declined.

An analysis by FBK says: "Reduction of investment in the economy is
primarily attributed to a decline in the amount of capital investment by
investors in basic sectors like the fuel sector and transport, which accounted
for slightly under 40% of all investment in 2001."

FBK Strategic Analysis Department head Igor Nikolaev says: "The
investment program of the Railways Ministry alone was at least halved in 2002.
The original plan allocated 160 billion rubles, but the amended plan allocated
114.4 billion rubles, and the real level cannot even exceed 70 billion rubles,
according to various estimates."

Investment remains a critical growth factor for the Russian economy. Based on
a survey done by the Development Center, analysts believe that investment will
outpace GDP growth rates. It is still impossible to rely on consumers - when
incomes rise, consumers instantly switch to imports.

Yevsey Gurvich of the Economic Expert Group suspects that the conclusions
drawn by the FBK analysts are more likely to have a statistical rather than
economic explanation. "When other implicit price deflators are used,
different from those of the State Statistics Committee, the investment picture
can change drastically," he says.

"I couldn't believe my eyes either, when I received this
information," responds Igor Nikolaev. "However, the use of different
implicit price deflators can only change the picture by fractions of a
percentage point, not by an order of magnitude. FBK has received data from the
State Statistics Committee 'in the usual way' - on a fee- paying basis - which
once again raises the question: what is the status of our state statistics
monopoly?"

There is another statistical puzzle the State Statistics Committee has
provided for the analytical community. "In early 2002 there was a collapse
of investment, which affected subsequent dynamics," Yevsey Gurvich says.
"But there is no commonly accepted explanation for that phenomenon."

"That is all correct," replies Igor Nikolaev. "But after that
we can once again see the resumption of a normal process, and then another slump
is registered in the second half of the year."

However, Nikolaev does not rule out a statistical explanation for the
investment collapse. This is quite likely, given that the State Statistics
Committee remains one of Russia's most secretive institutions, while at the same
time actually determining the forecasts of Russian economists.

Today, according to most economists, Russia indeed has remarkable
opportunities for development, including increased investment. However, we won't
be able to discern even the vague outlines of the future, as long as we have to
be content with old statistical prescriptions, based on those borrowed from the
Soviet past. At the same time, the scanty statistical information available -
much like the situation in China - can become an impeding factor as well. It is
hard to travel fast when you can't see the road in front of you.